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Mexico’s New Narrative

Author: Julia E. Sweig, Nelson and David Rockefeller Senior Fellow for Latin America Studies and Director for Latin America Studies
December 5, 2012
Folha de Sao Paulo

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First published in Portuguese in Folha de Sao Paulo.

The inauguration of Mexico's new president Enrique Peña Nieto inspired a flurry of media chatter that Mexico's moment has arrived. Reports of his visit with President Obama last week praised his success in 'changing the subject' from violence and insecurity to happier thoughts of economic partnership and the new middle class. (He did this after his election on a visit to Brasilia as well) The FT, the Economist and pundits now argue that with the Mexican economy poised for a sustained recovery, it is time for Washington to get over its fixation on undocumented immigrants and cartel violence and instead focus more on commercial and energy opportunities. The subtext of this shift in narrative is that as Mexico becomes more competitive, thanks to low tax rates and higher labor costs in China, Brazil's star shines less brightly, thanks (in part) to onerous tax rates and to a slowing China.

In advancing Mexico's new narrative, Peña Nieto's team has clearly studied the cases of Brazil and Colombia. Brazil, which suffers from drug and police related violence as well, also figured out how to tell a positive story about its new middle class, energy, environmentalism, and until recently, its booming growth rates. All of those international rankings for doing business in Brazil remained poor throughout the very same period that capital poured into the country in search of good investments. The narrative about Colombia likewise pivoted swiftly over the last two years. Terrorism, insurgencies, homicide and drugs yielded in the public story to trade, investment, the middle class, cultural heritage and natural beauty. But poverty and inequality remain abysmal.

Of course, these transformations are not just spin. Mexico's economy is recovering and its middle class is growing, even as cartel violence continues. Colombia is ending its internal conflict and at last mounting a serious strategy to deal with rural land issues, long fuel for violent conflict there. And while local content requirements, lack of technical capacity, and infrastructure constraints have slowed the Brazilian economy, the scenario there is, as one Brazil business strategist confided, "neither as bad now as people think, nor was it as good as people were saying before." My guess? The same will be said of Mexico or Colombia a few years down the road if and when they too take even a small dip from their current trajectory.

The competition between Mexico and Brazil for Wall Street and Washington's blessing—with Colombia playing the self-described geographic and diplomatic middleman, has its own rationale, I guess. What I find irrational is how quickly the chattering classes embrace the most compelling, if incomplete storylines. In today's Latin America, democracy, insecurity and economic opportunity co-exist. Wall Street can deal with that complexity. But can Washington?

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